 $4 million to replace worn public safety equipment such as police cruisers, fire trucks, ambulances and radios.

Lexington Mayor Jim Gray called his proposed budget for 2014 a businesslike budget that includes a 2 percent pay raise for civil service employees and more funding for the Lyric and Kentucky theaters.

In his annual budget speech Tuesday, Gray said the city was back on solid financial ground, due in large part to reforms over the past two years in employee health insurance, collective bargaining and police and fire pension funds.

These reforms will save the city about $25 million in 2014, including $10 million annually for health insurance reforms, $3 million in new union contracts and $12 million in recent reforms to the police and fire pension plan

Making these changes required "difficult, but essential decisions," Gray said.

The pension reform, for example, allowed the city to solve its biggest financial problem by cutting long-range debt from nearly $300 million to $161 million.

Still, people should not "expect a $25 million in savings to produce a 'ginormous' windfall," Gray said, because "we never really could afford to pay those bills" in the first place, at least not without borrowing more or cutting programs each year.

While the city's financial stability appears to be back on track, Gray said, "The caution light is still blinking."

Revenues this year have made modest gains and are projected to increase 2.7 percent by the end of the fiscal year on June 31.

Gray said his 2014 budget reflects disciplined savings and careful spending — both were priorities in his first two budgets.

The city will put $600,000 into its rainy day fund, increasing the balance to $18 million. The amount in the rainy day fund is an important indicator of a city's financial health, Gray said, and a significant factor that bond rating agencies look at when assigning a city its bond rating.

The proposed $297 million spending plan for fiscal 2014 represents a 2.7 percent increase over last year's budget.

The budget includes:

■ A 2 percent raise for non-police and fire employees. Employees got a 2 percent raise last year, but before that it had been several years since their last raise.

■ Limited bonding of $15.7 million to invest in infrastructure. "There will be no pension bonding," Gray said.

■ Funding for 35 new firefighters — though 28 will be funded through federal grants this next year — and another ambulance.

■ $120,000 to set up a Homelessness Office to coordinate services, a goal identified by the Mayor's Commission on Homelessness.

■ $5 million to buy land and design a new senior citizens center. The three preferred sites are the former Springs Motel property, the former Kroger store at Beaumont Center, and Turfland Mall.

■ $150,000 for multiuse sports fields for soccer, football, field hockey and lacrosse at Shillito Park.

■ Funding for youth activities and camps for children with mental and physical disabilities.

■ $300,000 to make basic structural repairs to the historic old Fayette County courthouse, including addressing some foundation issues. The courthouse was closed in July because of deteriorating lead-based paint.

■ $4 million to replace worn public safety equipment such as police cruisers, fire trucks, ambulances and radios.

■ Funding for a medical director to supervise emergency medical technicians in the fire department.

■ The addition of a chief information officer to lead the city's information technology initiatives, including CitizenLex.org, a proposed website that would offer a way to tap residents' ideas for innovative solutions to challenges facing the city.

Gray included a 1 percent increase in the franchise fee — proposed as part of last year's budget — to allow the city to continue to pay for streetlights in neighborhoods and on major thoroughfares.

"The alternative is cutting streetlights and other services," Gray said.

The increased franchise fee on gas and electric did not have to be implemented last year because the city covered streetlight expenses with savings from the year before, Gray said. "But demands have increased, and this revenue will be essential moving forward," he said.

No cuts in city services, no closing of pools or golf courses are necessary in the budget because local government has spent the past 21/2 years looking for efficiencies and ways to reduce spending, Gray said. This has been done while operating local government in a way to meet citizens' expectations.

"We're at that level today," he said in the morning news briefing.

The mayor's budget now goes to the Urban County Council for three months of discussion, dissection and changes. The final budget must be approved by June 30, the end of the fiscal year.

Vice Mayor Linda Gorton said after the speech she had not had time to study the details.

"It's got some really good things in it. Of course, it's dependent on increased revenue the administration thinks will come in, almost $10 million more than last year," she said.

Of the proposed increase in the franchise fee that would raise about $4 million, Gorton said, "There are always some council members opposed to increased fees and taxes whatever the reason."

Council member George Myers said he would have to study the franchise-fee proposal.

"I look forward to hearing more discussion on this proposed increase," he said. Overall, the budget showed "good fiscal management while growing Lexington into a city that is family friendly and attracts people from around the world," Myers said.

Council member Chris Ford he was encouraged by the $460,000 included for social service agencies to help children and the most vulnerable citizens.

Ford also applauded the raise for civil service employees. "What it shows is we value their service. It's important as we improve financially that we don't forget to reward them."

At a glance

Highlights from Mayor Jim Gray's speech:

A 2 percent raise for non-police and fire employees.

 Funding for 35 new firefighters — though 28 will be funded through federal grants this next year — and another ambulance.

$120,000 to set up the Homelessness Office to coordinate services, a goal identified by the Mayor's Commission on Homelessness.

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